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Is Google or Apple More Pirate Friendly?

Developers! Developers! Developers!

Piracy is terrible for developers. Losing developer support and interest doesn’t bode well for the creation of content for consumers who are willing to pay for them, which, in turn, hurts the underlying platform. Google(Nasdaq: GOOG) and Apple(Nasdaq: AAPL) have now erected the largest mobile app repositories known to man. Is Android or iOS more prone to piracy?

Exhibit GEarlier this week, there were reports that developer Madfinger Games had thrown in the towel against pirates with one of its titles. Madfinger is the developer behind the popular mobile shooter, Shadowgun, and supports both Android and iOS. It recently launched a new zombie-centric shooter called Dead Trigger, available for the standard price point of just $0.99.

Yet, on Monday, the company announced it was making the Android version entirely free, primarily because the piracy rates on Android for the title were "unbelievably high." Even though it costs much less than Shadowgun or a cup of coffee, the piracy rate was "soooo giant," and Madfinger gave in. The iOS version of the game remains at $0.99.

That’s pretty demoralizing for a developer that a quality game can’t fetch many legitimate sales, even at the lowest reasonable price point.

Exhibit AApple’s record was also tarnished earlier this month, when a Russian hacker figured out a way to score in-app purchases, and promptly decided to share it with the world. Importantly, it didn’t require any jailbreaking, the method of loosening Apple’s restrictions on iOS in order to run unapproved software. It just required a user to point to the hacker’s server, which mimicked Apple’s, and would send "paid receipts" to the device to unlock content.

In-app purchases have become one of the most lucrative revenue sources for developers, with Amazon.com(Nasdaq: AMZN) even recently implementing it for its own Android Appstore. Being able to get free in-app content is a major hole in the pockets of developers. Apple responded quickly, and has figured out a way to temporarily close the loophole, with a permanent patch coming in iOS 6, due out this fall.

The hacker admitted defeat, saying he couldn’t bypass the new receipt validation system.

A diatribeFollowing the Android debacle, a developer named Matt Gemmell penned a rather harsh diatribe against Android and piracy. In fairness, Gemmell focuses on iOS and Mac OS X development, so his opinions may be biased, but he has good points and understands how it works behind the scenes.

Gemmell points out that pirating a $1 game isn’t about the cost, or even about the inconvenience of trying to purchase it through legitimate channels, like in the music industry before iTunes came along, where there were no legal digital distribution channels. Buying a $1 game on either platform takes just a couple of taps and costs you … $1. Instead, the developer maintains that users pirate apps simply because it’s so easy.

He calls Android "designed to be difficult to make money from" and even "designed for piracy from the ground up." On Android devices, it’s much easier to install apps from third-party questionable sources, while on iOS, it’s painstakingly difficult, and Apple is quick to lock-down whatever holes it can find. In this sense, Android is certainly "too" open.

Everything I do, I do it for youWith this in mind, it makes sense why developers, on average, prefer iOS, and also generate over four times as much revenue, despite the fact that Android’s market share is over twice that of iOS. The right move for Google would be to close down Android in this sense for the sake of developers.

Apple’s obsessive control over its platform benefits developers. The company has now paid out a cumulative total of $5.5 billion to developers, implying a $2.36 billion cut for its troubles over the past four years. With over $356 billion in total revenue over the same time, clearly it’s not doing it for the money.

Instead, Apple does it because it’s what’s right for developers, and that makes it right for consumers.

Apple’s focus on the consumer is why it's where it is today. It’s also why its growth story isn’t complete yet. Sign up for The Motley Fool’s brand new premium research service that’s all about Apple to read more about the iPhone maker’s future.

Author

Evan is a Senior Technology Specialist at The Motley Fool. He was previously a Senior Trading Specialist at Charles Schwab, and worked briefly at Tesla. Evan graduated from the University of Texas at Austin, and is a CFA charterholder.